Manila: Easing inflation and slow economic growth provide more room for the Bangko Sentral ng Pilipinas (BSP) to further reduce policy rates during the Monetary Board’s (MB) next meeting, an economist said.

According to Philippines News Agency, Rizal Commercial Banking Corporation chief economist Michael Ricafort mentioned in a Viber message that the MB would likely continue its easing cycle on Aug. 28, reducing policy rates by another 25 basis points. Ricafort highlighted that local monetary officials have recently signaled potential 50 basis points local policy rate cuts for the remainder of the year, alongside a possible reduction in banks’ reserve requirement ratio (RRR) in 2026. This is amid a still benign inflation environment despite recent tensions between Israel and Iran, which could slow down global economic growth and, indirectly, local economic growth, thus warranting accommodative monetary policy measures to boost economic growth as a priority.

Ricafort further noted that relatively benign inflation rates, ranging from 1 to 2 percent, could persist for the rest of 2025, justifying future local policy rate cuts. Inflation has decelerated to a nine-year low of 0.9 percent in July, which Ricafort expects to settle at 1.7 percent by the end of 2025.

He emphasized that this inflation trend could support further BSP rate cuts, potentially aligning with future Federal Reserve rate cuts for the rest of 2025, consistent with signals from local monetary officials.